"Engineers at Motorola are hard at work on a sophisticated handset, to be released next year, that parent Google hopes will provide more potent competition for devices like Apple's iPhone, said people familiar with the matter." Well, paint me red and call me a girl scout. This is more fascinating: "Motorola also ran into difficulties when it looked into using a bendable screen and materials such as ceramics that would allow the company to make the X Phone more stress resistant, use more colors and mold into different shapes, these people said." Bendable displays could be a huge turning point for mobile - and not because they allow new shapes. No, the killer 'feature' of bendable displays will be their resilience.

...unless Google wants to become an hardware first company and believe Mot can outdo Samsung and Apple in hw design (given their track record, an extremely naive assumption) of course. such an announcement would kill Android leverage in no time leaving them with nothing.
Android dominance is currently based on a soft power, where competitive interests of HW companies, software houses and carriers are playing out on more or less level playing field, and it's based on a very volatile balance. One that can be crushed with one bad move such as this one.

It's not a bad move, really. Motorola is just like any other Android manufacturer and Android will not be a Motorola exclusive. This is just adding a new player to the fray (I know it's not really a new player, but you know what I mean).